Energy Subsidies, the Dilema

[Gary_C]

Now that the election is over, congress and the new president can hopefully get back to some real progress on the energy problem. There was one bill that has been passed on alternative energies, but more may be necessary.

A few weeks ago my son was in Duluth, MN for a weekend and the papers there always report the arrival, unloading, and departure of ships in the harbor. There was a large ship that was unloading windmill parts for the large wind energy farms being built in southern MN. The parts came from Croatia. This is not surprising as the Europeans are farther ahead in developing wind energy than the US

The dilema is this, if we are going to provide subsidies to develop end grow these alternative energy sources and at the same time provide jobs for people in the US, how is this going to work when we import the parts from another country? Also I saw where some of the wind projects being built in the US are actually owned by foreign companies thru a subsidary in the US.

Do we just wind up sending more taxpayer money to other countries?

[OneWithWood]

Good point, Gary.

Perhaps with some applied outside the box thinking we could use some of the idle machining facilities in production facilities here in the US to make these parts.  Of course the rest of the world has been forging ahead while we pandered to entrenched corporations so it is possible that there are patents on the needed products or other intellectual property protections in place that prevent US compainies from copying successful designs.  Even so we could license the technology and fabricate the parts here.  The higher costs would be worth it in the long run to keep the necessary skills alive here.

[StorminN]

Gary,

The way the state subsidies work here in WA State is this:
We buy power normally for about $0.06 a kWh (yes, it's cheap... thanks to our big hydro dams).
If we have RE gear (a windmill or PV panels) and the equipment is NOT made in WA state, we can sell that power back to the grid for $0.15 per kWh.
If we have WA State - made equipment, we can sell the power back for up to $0.54 per kWh...

So you see, the incentive is to use equipment made right here. This keeps jobs in our state... and is actually creating jobs... one of the inverter manufacturers (Outback) is setting up a solar panel manufacturing line right now in Arlington, WA.

This same sort of incentive program could be implemented for the entire US... maybe a two-tiered system... if you use US-Made equipment, you get a certain Federal incentive, then if the states want, they can have their own incentives... something like ours... if the equipment is actually made in your own state, you get even more.

What all of this does is reduce the ROI so the equipment pays for itself in seven to ten years... after that, it's gravy.

-N.

[Larry]

I was making regular trips between north Missouri and north Arkansas for a while.  Almost every trip I saw windmill blades and towers being trucked to north Missouri and Iowa from the port at New Orleans.

But jobs...and I hope good jobs are coming to Arkansas to manufacture the blades previously imported from Denmark.

http://www.nwanews.com/adg/Business/239742/

[Ron Wenrich]

They have a heavily subsidized solar industry in Germany.  Its gotten to the point where some of the farmers have put solar collectors in the field instead of doing crop farming. 

But, wouldn't it make more sense to bring the traditional producers in line with the alternative energies?  Subsidies take from the taxpayer and make an unprofitable industry profitable.  But, if you raise costs on the more polluting industries, you would raise their costs through either capital investment to get pollution in line or through taxes.  The taxpayer could then get the subsidy instead of the industry to help offset the higher utility costs. 

It would also make the whole energy production industry more competitive, and bring costs down.  Subsidizing an industry does little to bring costs down, since there is no incentive. 

[StorminN]

They have a heavily subsidized solar industry in Germany.  Its gotten to the point where some of the farmers have put solar collectors in the field instead of doing crop farming. 

But, wouldn't it make more sense to bring the traditional producers in line with the alternative energies?  Subsidies take from the taxpayer and make an unprofitable industry profitable.  But, if you raise costs on the more polluting industries, you would raise their costs through either capital investment to get pollution in line or through taxes.  The taxpayer could then get the subsidy instead of the industry to help offset the higher utility costs. 

It would also make the whole energy production industry more competitive, and bring costs down.  Subsidizing an industry does little to bring costs down, since there is no incentive. 

Ron, this is a complex issue, and I haven't read enough to know exactly how all the subsidies work... where the money comes from, etc... but I do know that the traditional energy producers... coal, oil, natural gas, nuke, hydro... are ALREADY heavily subsidized, and have been for decades... so any subsidies that the renewable energy industry gets is just barely starting to level the playing field.

You talk about RE as being an unprofitable industry... I don't know the numbers off hand, but I'd like to see how "profitable" an industry like nuclear power really is, if you count everything... the cost to self-insure the plants, the cost to build them, the cost to tear them down, the cost to mine the uranium, keep it safe, use it, and then hold the waste securely for 500 years, etc.

People will also say that if you don't use tax money for subsidies, but rather raise costs on the more polluting industries, those industries will just then in turn pass the increases on the taxpayers... so we pay either way.

Just some quick thoughts tonight...

-N.

[Ron Wenrich]

I did some work in biomass energy back during the last energy crisis.  We had to compete with all those energies with no subsidies.  The only thing that we got is that the energy companies had to buy our electricity at their replacement rate.  That's a pretty level playing field.  We could beat nearly everything out there, except coal.  They would drop their per ton costs and blow our projects away.  We always had to have a secondary steam user in order to make the project profitable.

Then, in the 1990s, the cost of gas got really cheap.  So, they put in a bunch of gas fired plants.  Most of them were small and didn't need a secondary steam user.  They just blow that out into the air.  My thoughts at the time were that gas prices were going to go up due to higher amount of users.  It proved to be true.

It think those subsidies are mainly at the state level.  I don't recall too many subsidies on our plants at the federal level, but could be wrong.

My point on subsidies is that we shouldn't be subsidizing the energy producer, but subsidizing the consumer, where needed.  It levels the playing field from the production standpoint and puts those subsidies in the consumer's pocket, not industry.  Sure, prices are higher, but the subsidies would balance that out on the consumer side.

I'm pretty familiar with the problems of the nuclear energy side.  I'm from Middletown, PA  and I was here during the TMI accident.

[LeeB]

So Ron, did you glow in the dark after that? ??? ???

[Ron Wenrich]

No, but I heard some stories that some of the surrounding farms about some birth defects they were having with their cattle.  I don't know if they were true or not.  I did have a goat that was pregnant during the accident, and she had one female kid.  That one turned out to be barren.  But, we all know that there wasn't any radiation leak, so there wouldn't be any relationship to the accident.  Right?

There were also reports of massive bird kills.  I did a management plan on 400 acres that was 7 miles SW of the plant.  I didn't see any dead birds in the woods, so, I doubt that one was very true.